Correlation Between Aldel Financial and Franklin Wireless

Can any of the company-specific risk be diversified away by investing in both Aldel Financial and Franklin Wireless at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Aldel Financial and Franklin Wireless into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Aldel Financial II and Franklin Wireless Corp, you can compare the effects of market volatilities on Aldel Financial and Franklin Wireless and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Aldel Financial with a short position of Franklin Wireless. Check out your portfolio center. Please also check ongoing floating volatility patterns of Aldel Financial and Franklin Wireless.

Diversification Opportunities for Aldel Financial and Franklin Wireless

0.17

Correlation Coefficient

Aldel Financial  Franklin Wireless

Average diversification

The 3 months correlation between Aldel and Franklin is 0.17. Overlapping area represents the amount of risk that can be diversified away by holding Aldel Financial II and Franklin Wireless Corp in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Franklin Wireless Corp and Aldel Financial is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Aldel Financial II are associated (or correlated) with Franklin Wireless. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Franklin Wireless Corp has no effect on the direction of Aldel Financial i.e., Aldel Financial and Franklin Wireless go up and down completely randomly.

Pair Corralation between Aldel Financial and Franklin Wireless

Assuming the 90 days horizon Aldel Financial is expected to generate 52.47 times less return on investment than Franklin Wireless. But when comparing it to its historical volatility, Aldel Financial II is 21.46 times less risky than Franklin Wireless. It trades about 0.03 of its potential returns per unit of risk. Franklin Wireless Corp is currently generating about 0.08 of returns per unit of risk over similar time horizon. If you would invest  295.00  in Franklin Wireless Corp on September 4, 2024 and sell it today you would earn a total of  135.00  from holding Franklin Wireless Corp or generate 45.76% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	12.15%
Values	Daily Returns

Aldel Financial II  vs.  Franklin Wireless Corp

Aldel Financial II

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Aldel Financial II are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. In spite of comparatively stable technical and fundamental indicators, Aldel Financial is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Franklin Wireless Corp

Risk-Adjusted Performance

2 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in Franklin Wireless Corp are ranked lower than 2 (%) of all global equities and portfolios over the last 90 days. Despite quite persistent basic indicators, Franklin Wireless is not utilizing all of its potentials. The recent stock price mess, may contribute to short-term losses for the institutional investors.

Pair Trading with Aldel Financial and Franklin Wireless

The main advantage of trading using opposite Aldel Financial and Franklin Wireless positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Aldel Financial position performs unexpectedly, Franklin Wireless can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Franklin Wireless will offset losses from the drop in Franklin Wireless' long position.

The idea behind Aldel Financial II and Franklin Wireless Corp pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

Check out your portfolio center.

Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.